Maurice R. "Hank" Greenberg, American International Group Inc.'s (AIG) former chief executive, said Wednesday that Starr International Co. moved a large block of the insurer's shares out of the U.S. in 2005 in order to avoid their potential seizure in lawsuits.

In his second day of testimony, Greenberg said the voting shareholders of Starr International, or SICO, instructed JPMorgan Chase & Co. (JPM) to release share certificates for millions of AIG shares in September 2005 and authorized their movement to Bermuda on the advice of their legal counsel.

The request was made the day after AIG filed legal claims over the shares against SICO. Greenberg is SICO's chairman and a voting shareholder.

In response to a question from U.S. District Judge Jed S. Rakoff outside the presence of the jury, Greenberg said the share certificates were moved to avoid their attachment in lawsuits, meaning they could be seized and used to satisfy judgments against the company.

"It was a reaction to the entire environment evolving between AIG, Starr International and some of the people involved," Greenberg said. "It began to get very ugly."

Greenberg is a key witness in a legal clash between SICO and AIG over millions of AIG shares held by the onetime sister company to AIG. He was forced out as AIG's top executive in March 2005 amid probes into the insurer's accounting.

AIG has sued SICO for $4.3 billion in damages - representing the sale of tens of millions of AIG shares since Greenberg left the insurer - and the return of more than 185 million shares SICO controls. The stock went to SICO in 1970 as part of a reorganization of AIG and its affiliates.

The jury trial is being heard in U.S. District Court in Manhattan and is expected to last a month. Greenberg is expected to continue his testimony on Thursday.

AIG claims the shares were set aside in a trust to fund a deferred-compensation plan for select AIG employees and executives and were improperly diverted by SICO and its management. About 1% of the company's employees and executives participated in the incentive plan.

SICO's lawyers have said the shares were placed aside for a number of purposes, including to protect AIG from a takeover bid, to go to charity if SICO were liquidated and to fund other projects.

"The idea all the shares would only be used for the two-year compensation plan is simply not correct," Greenberg said Wednesday.

AIG's lawyers have said the share certificates were flown out of the U.S. by private plane. When asked if he remembered that happening, Greenberg said, "It's possible."

On Wednesday, Greenberg admitted that he was angry after he was asked to step down as AIG's top executive.

"I wasn't very happy," he said.

Greenberg stepped down as the company's CEO on March 14, 2005, and as its chairman on March 28, 2005.

The same day he stepped down as chairman, according to court documents introduced Wednesday, Greenberg and SICO's voting shareholders voted to remove AIG executives from SICO's board.

They were replaced by three SICO voting shareholders - all in their 80s, according to the documents.

During Wednesday's testimony, Ted Wells, a lawyer for AIG, played a video of a November 2000 speech that Greenberg gave to participants in the deferred-compensation plan.

In the speech, Greenberg said there were enough shares to fund the compensation plan for a "couple hundred years." Greenberg testified Wednesday that was simply a "motivating" speech and an exaggeration.

"No company can plan for 200 years," Greenberg said. "You're lucky if you could plan five years in advance."

Greenberg said the intention of SICO's voting shareholders - 11 or 12 depending on the time period - was for the shares to increase in value and ultimately to go to a charitable foundation if the company was liquidated.

"I think all the voting shareholders of SICO understood that," Greenberg said.

-By Chad Bray, Dow Jones Newswires; 212-227-2017; chad.bray@dowjones.com